June 2020 - Amanda Robertson

Stamp Duty Impacts our Ability to Move House

June 26, 2020June 25, 2020 by Nicola

John McGrath

04/05/2020 | 4 MIN READ

The Reserve Bank Governor’s recent suggestion that we reform land and property taxes as part of a broader Covid-19 recovery plan has once again highlighted the negative effect that stamp duty has on our ability to move house when our life circumstances change.

Governor Philip Lowe said: “As we look forward to the recovery, there is an opportunity to build on the cooperative spirit that is now serving us so well to push forward with reforms that would move us out of the shadows cast by the crisis.”

The first of these economic reforms should be “the way we tax income generation, consumption and land,” he said.

Over the weekend, NSW Treasurer, Dominic Perrottet said abolishing stamp duty would form part of his proposed plan for the state’s economic recovery from Coronavirus.

Mr Perrottet was quoted in Saturday’s Sydney Morning Herald saying: “There is no better time to rid the states of inefficient taxes that hold back economic growth and I am talking stamp duty and payroll taxes.”

Stamp duty is easily the worst of the taxes that residential owners have to pay every time they buy a new house. It’s calculated based on the purchase price and there’s been little change to it despite prices rising significantly over the past three decades.

The median house price in Sydney in 1990 was less than $200,000, on which you’d pay about $5,500 in stamp duty. Today, it’s above $1 million and the duty is more than $40,000.

As a result, many families are living in cramped environments or far away from their work or their kids’ schools because moving is simply too expensive.

Data shows that people are staying put longer in their current homes and this has implications for society.

It means family homes are not being released to the market by single or couple empty-nesters who would like to downsize but don’t want to pay this prohibitive expense that punches a huge hole in their retirement savings for absolutely no reason.

Younger buyers typically have to borrow the funds to pay the stamp duty, which adds tens of thousands to their loans, which they then pay interest on for many years.

Nobody in government, on either side, wants to talk about this because they are completely addicted to the billions of dollars in revenue that stamp duty brings in every year.

Dr Lowe’s comments resulted in a chorus of criticism on stamp duty in the media. In a story published on domain.com.au, AMP Capital Chief Economist, Dr Shane Oliver described stamp duty as “a terrible tax”.

“It’s a massive impost on a single transaction which inhibits economic decision-making. It should be repealed, and this is the perfect time to do it,” he said.

In 2018, a Grattan Institute report on housing affordability recommended replacing stamp with a broad-based, flat-rate land tax.

“Long term, reform will create benefits for the economy and boost the Gross Domestic Product significantly,” said economist and report co-author, Trent Wiltshire.

The ACT Government is leading the country on stamp duty reform. They began phasing it out in 2012 under a 20-year plan and raised rates for all property owners instead.

Currently, a median priced home in Canberra will cost you $700,000 with stamp duty of $20,000 (still high but better than the $32,000 you would have paid before reform in 2012).

By comparison, stamp duty on the same property in Sydney today would be $27,000, or $37,000 in Melbourne or $17,350 in Brisbane.

It’s high time that other state and territory governments start embracing ideas for reform on this tax. Not just because it’s the right thing to do, but also because an ongoing reduction in housing turnover means fewer sales per year and ultimately fewer stamp duty payments.

Over time, if the revenue from stamp duty drops, they might finally be motivated to reduce or abolish stamp duty to enable and incentivise people to move house as often as they need.

This article originally appeared in The Real Estate Conversation (May 4, 2020)

Real data vs what the doomsdayers are saying – REINSW

October 5, 2022June 25, 2020 by Nicola

REINSW president Leanne Pilkington said doomsday predictions are being fed to us on a daily basis that the world, post-COVID-19, is collapsing around us.

“Unfortunately, some property market commentators seeking to get their name attached to a headline have been quick to predict that the housing market is going to crash,” said Ms Pilkington.

“The first said the market would suffer a 10 per cent decline in values. “The next had to ratchet it up if they were to be recognised, so the decline was then predicted to be 20 per cent and last week yet another analyst said 32 percent. “Ms Pilkington pointed out that none of these commentators or analysts referred to any data.

“The COVID-19 pandemic has and will continue to adversely impact the market – particularly in relation to transaction numbers – there is no doubt about that,” said Ms Pilkington.

“However, will it be as bad as the doomsdayers’ analysis says? “Only time will tell. “Nevertheless, what history has repeatedly demonstrated is that if we hear the negativity over and over again, then it becomes a self-fulfilling prophecy.” Ms Pilkington has suggested that potential purchasers would be better served to follow the data rather than the headlines.

The following data sets out the preliminary clearance auction results over the last three weeks.

Week ending 24th May 77.9%
Week ending 17th May 73.4%
Week ending 10th May 70.8%

“It is interesting that the analysts who are now saying the market needs a ventilator, are the same ones that were previously saying we were in a boom when the market had 80 per cent clearance rates,” said Ms Pilkington.

“So, the way I do the maths, the distance between apparent boom and bust is 2.1 per cent. “If vendors are selling, then the properties are clearly reaching their reserve. “In fact, feedback from the REINSW member agents and auctioneers indicates that properties have been comfortably exceeding their reserve.

“As we know when demand outstrips supply property prices don’t tend to fall. “We’re not seeing a lack of confidence with purchasers, quite the contrary.” Ms Pilkington admitted, however, the same cannot be said for vendors. “Lack of stock could well be the issue for the market as purchasers are still keen to buy,” said Ms Pilkington.

“Hopefully, that will turn around once vendors come to understand that the world hasn’t collapsed. “Property is a long-term asset acquisition; it cannot be lumped in with share market volatility.

“You don’t day trade property! “Importantly, shares don’t put a roof over your head – property does!”

Ms Pilkington said housing delivers one of the human necessities, shelter. “It’s one of the first things we buy and the last we sell,” said Ms Pilkington. “In a market downturn, the discretionary expenditure gets cut first.

“We have seen over and over again, when the economy becomes unstable people gravitate to “bricks and mortar”. “We cannot predict what will be happening in the housing market in six months’ time, but the data makes it clear, it is not collapsing around us right now.”

Contact Amanda Robertson 0418 234 12

Property Trends Beyond COVID-19

June 26, 2020June 25, 2020 by Nicola

JOHN MCGRATH

15/06/2020 | 4 MIN READ

Many Australians will be making new choices about how and where they live, borne out of financial necessity for some or a long dreamed about lifestyle change for others.

Here are the trends I see for the future as we emerge from the Covid-19 pandemic.

More multi-generational households

Job losses and financial stress will bring families together.

We’re already seeing many young renters moving back home with mum and dad.

Older Australians who don’t want to re-start their businesses might also consider moving in with their children and grandkids for a change of pace.

If there’s not enough room already, the HomeBuilder program might help fund the necessary extensions.

Empty nesters downsize earlier

Some empty nesters will downsize earlier because their businesses won’t survive.

With their superannuation also diluted, cashing in the family home might be the most appealing option.

Those aged over 65 can use their downsize to contribute up to $300,000 extra into their super (each) from the sale proceeds.

Working from home in lifestyle locations

A large contingent of permanently home-based workers will likely head to the regions for a better lifestyle within commuting distance of the city.

You can expect the Byron, Central Coast and Illawarra regions of NSW to be beneficiaries, as well as Noosa and the Gold Coast in Queensland.

ACT workers might like a treechange to Goulburn or a seachange to the NSW South Coast.

In Victoria, there are many commutable options including Ballarat, Geelong and the Dandenongs for example.

In the cities, inner garden suburbs like Sydney’s Haberfield, Australia’s original ‘Garden Suburb’, will be in high demand from newly at-home workers.

These suburbs offer bigger homes on larger lots with space from the neighbours, leafy streets and public parks and all just 15 minutes from the CBD.

Investors take short term pain for long term gain

There may be some short term pain now, with material adjustments to weekly rents on re-lettings.

Financially stressed landlords will sell their investments before their homes, however low interest rates are helping the majority to hang on to their assets for now.

Cashed up investors whose businesses are going well might want to expand their portfolios, with loan rates at 2-3 per cent and returns at 3.5-4 per cent.

Technology makes it easier and more efficient

Covid-19 forced every agent to adopt high-tech work tools overnight.

Online auctions, greater use of virtual tours, meetings via zoom and streamed inspections are now the way of the future.

This will make it easier than ever before for people to research, buy and sell property.

More overseas buyers

Our agents sold half a dozen or so properties to people overseas who couldn’t inspect them during the lock down, which shows just how good the buyer experience has become online.

Ten years ago, buyers had photos and a floor plan, now there’s drones, videos, virtual tours and live streaming.

The Australian dollar is also very attractive, and I think we will be seen as a safe haven once again.

Work from home will influence design

Designated home offices, home gyms and multi-purpose spaces will be the new must-haves.

Homeowners will be more mindful of creating safe, adaptable environments that are pleasant to work in.

Those who depart cities for affordable regional areas will want big houses with lots of extra rooms.

It’s been a devastating time for the world and it’s not over yet, with many of the economic ramifications yet to play out.

Meantime, many people are reassessing their lives and considering what silver linings are there for the taking. I hope today’s column inspires your next move!

This article originally appeared in The Real Estate Conversation (June 15, 2020)

Call Amanda Robertson, McGrath Estate Agents – Your upper north shore specialist

0418 234 122

Buy first, or sell first? Your home conundrum answered

October 5, 2022June 25, 2020 by Nicola

Buying and selling houses can be tricky, particularly if you are selling and buying a home at the same time. Should you buy a new property first, or sell your current home before purchasing a new one? It’s an age-old conundrum.

We take a look at the pros and cons in the light of the current housing market, to help you make the right decision.

How to buy a new house in the current housing market

It is currently a good time to be a buyer, while there might be limited stock, evidence of the last couple of months is that housing prices are stabling. If you are cashed up, have your loan pre-approved there are good properties to be found.

For this reason, in the current climate, buying a house before selling your own doesn’t always make sense. Once you have released the equity from your current property, you can keep your eye out for a property you love, and you might be able to grab it at a bargain price. However, the process you choose will depend entirely on your circumstances.

Can I buy another house before I sell mine?

Technically, there’s absolutely nothing to stop you doing so if you can afford it. Buying a new home before selling your current one does have a couple of advantages:

It means you don’t miss out if you fall in love with a particular property before you have sold your own.
It gives you more time to complete the move – you can take your time moving all your possessions, as there is nobody else waiting to move into your current home.

However, these elements tend to be outweighed by the advantages of selling your current home before you buy a new one:

1. You are more likely to achieve the best possible sale price

If you sell your current property first, you have time to make it look as attractive as possible so it will gain a higher sale price. You can also take time to consider offers and negotiate with buyers until you get the results you want.

If you have already bought a new property, you might be desperate for the money, as you could be paying two mortgages at once, or have a bridging loan. This could tempt you to sell your current property for less than it is worth for a quick sale.

2. You know exactly how much money you have to spend

Selling your current property first lets you know exactly what you can afford when it comes to purchasing a new property. It prevents you from getting into financial difficulties through overestimating the value of your current property, then not achieving the sale price you wanted.

3. It can save you time as well as money

If you buy a new property before you sell yours, you will not only have to pay two mortgages and two sets of bills, you will also be responsible for the upkeep and maintenance of two properties. This can take up a considerable amount of your time when you should be settling into your new home.

4. Remember, you don’t have to rush your move

Ideally, you need to find a new home as quickly as possible after selling your current one. However, it doesn’t mean you need to end up staying with relatives! You can always extend the settlement period on your current property to give you more time to find a new property you love.

Find out more about how to buy a house while selling your own

One of the most important things to do when buying or selling a house is to find an experienced and reputable real estate agent who will be able to make the process as smooth as possible for you. If you would like more information about buying and selling houses or want to know how to buy a house before selling yours, please contact me, and I will be happy to help.

Home Improvements on a Budget

October 5, 2022June 25, 2020 by Nicola

If you want to sell a house that needs updating, it’s essential to know the best home improvements to make before selling if you want maximum returns.

Is it worth renovating a house before selling? This is a question many home sellers ask, particularly if they are selling a house that needs repairs. Before you start spending, it’s essential to know the right home improvements to make before selling your home. Getting the balance right is crucial if you want to make your money back.

The right home improvements don’t need to be expensive to make a huge difference to your home. Here we reveal the best renovations to do before selling if you want to maximise your selling price.

How to sell a house that needs updating

Talk to an agent

The first thing you need to do is talk to a reputable, experienced real estate agent. They will know the market in your area, so they will have the best idea of what local buyers are looking for. There’s no point adding features that simply won’t attract buyers, as the cost of these renovations might not end up being reflected in the sale price.

An experienced agent will take a look at your home and advise you of cosmetic changes that will make the most difference and achieve maximum returns on your investment. They will also be able to put you in touch with a professional home stylist who can showcase your property in its best light.

Find a team of reputable tradespeople

DIY is fine if you’re experienced, remember all renovation work has to look professional to attract buyers. If you’re not confident doing a job yourself, even if it’s just painting, it’s far better to get an experienced tradesperson to do it.

You should always get at least three quotes for every job, but don’t always be tempted to go for the cheapest – their work might not be good quality, so it could cost you more money in the long run as you might not achieve the sales price you’re hoping for. It helps if you can get recommendations first – it’s worth talking to your real estate agent, as they might have a team of trusted tradies they use regularly.

Don’t overspend

Remember, the most important thing here is to add value to your home. You don’t want to overspend or have to get a loan to fix your house to sell, as you are unlikely to see a return on your investment.

In addition, the buyer is unlikely to share your taste. If you spend thousands on a new kitchen or bathroom, they could easily rip it out as soon as the house is sold.

This means the most important thing is to concentrate on essential repairs and small cosmetic changes. Selling a house in poor condition is extremely difficult, but you can easily fix the main problems without breaking the bank.

What are the most important improvements to make before selling a house?

Clean and tidy

Make sure your property is completely decluttered and give it a thorough deep clean before making any other improvements. This will give you the best sense of what other work needs to be done, if any.

Freshen up

A coat of paint can make a huge difference to the look and feel of your home. Stick to neutral colours, as buyers want a blank canvas that they can imagine stamping their own personalities onto.

Re-grouting tiled areas can make them look new, as can simple improvements like changing the handles on cupboard doors and drawers. If your cabinetry looks shabby, simply replace the doors, wherever possible, rather than investing in brand-new cabinets.

You should also replace any worn or damaged flooring, but this can be done cheaply – you don’t need to buy the most expensive. It’s amazing how much difference a few small cosmetic changes can make. For example:

In the bathroom: You can retile a bathroom quite cheaply, particularly if it’s relatively small. You can also replace the doors on a vanity, swap old tapware for new, paint the ceiling and you’re done.
In the kitchen: Replace cupboard doors and handles, paint the walls, put down a new floor covering, replace old tapware and your kitchen will look like new.
In the garage: Make sure the space is tidy and ordered, and check the door mechanism works.

Make any necessary small repairs

Creaking doors, dripping taps or broken tiles are instant turnoffs for buyers, as they suggest there might be other, larger problems with your home. Make sure all these minor issues are fixed. Don’t forget the exterior of the property, either – make sure the roof tiles and fence are in good condition.

Whatever changes you decide to make, you should choose budget-friendly, timeless options rather than following the latest trends, and always talk to an agent first.

If you would like any advice, we are always here to help, call – Amanda today on 0418 234 122

Winter a good time to sell in a resilient market

June 26, 2020June 22, 2020 by Nicola

All the latest pricing data indicates only a small hit to the property market from Covid-19 so far.

A lack of homes for sale is helping to keep prices stable, with Sydney values dipping only slightly by -0.4 per cent and Melbourne -0.9 per cent in May, according to CoreLogic.

Brisbane dipped just -0.1 per cent and Canberra values increased 0.5 per cent.

At a Glance:

Property prices along the East Coast are already down about 4-5 per cent
There was a-33 per cent decline in sales activity in April during the lock down and an 18.5 per cent bounce back in May
Another 10,000 guarantees for the First Home Loan Deposit Scheme will become available from July 1.
The regionals showed more resilience than the capitals overall at 0.0 per cent.

Of course, this data has a lag to it.

Overall, I think property prices along the East Coast are already down about 4-5 per cent but of course, there are exceptions.

Values for the best quality properties haven’t moved at all.

The beautiful home in the best street in the suburb will always be attractive and sell well.

Investor grade stock, such as apartments on busy roads with little differentiation, have come back 10-15 per cent but that’s better than it could have been.

Recent media reports have suggested price falls of up to -30 per cent.

I’ve seen many of these articles over the years and in reality, it’s usually 5-10 per cent and they generally catch up within 12-18 months.

CoreLogic says there was a -33 per cent decline in sales activity in April during the lock down and an 18.5 per cent bounce back in May.

Pre-listing agent activity on CoreLogic’s internal system indicates there will be an uptick in listings for Winter.

If you want to sell, Winter is a pretty good time to be doing it.

There will be more stock coming on and at some point, that will dilute demand.

Buyers don’t need to rush but they shouldn’t sit on the sidelines too long.

We could be entering a window where buyers priced out six months ago now have an opportunity to get in; and with interest rates as low as 2.19 per cent fixed for two years, that’s almost money for nothing.

Interest rates are protecting owners who have experienced reduced work and rental incomes.

In the GFC, 25 per cent of the market was locked in to fixed rates at 9 per cent.

Now, you can get 2.5 per cent readily, so it’s a different environment.

This is one factor driving demand from first home buyers, who are looking past the pandemic and buying enthusiastically with the First Home Loan Deposit Scheme for FY20 already ‘sold out’.

Of the 10,000 deposit guarantees reserved, about 3,100 were in NSW, 2,300 in Victoria, 2,100 in Queensland, 550 in Western Australia, 400 in South Australia, 200 in the ACT, 180 in Tasmania and 35 in the Northern Territory.

Another 10,000 guarantees will become available from July 1.

We’re not out of the woods yet with Covid-19

There’s still the possibility of a second wave and some of the financial implications locally and globally are still to play out over the next few months.

Last week, we learned that GDP for the March quarter fell by -0.3%. It was a big headline because it was only the 4th negative quarter during 29 consecutive years of growth.

But compare this to the rest of the world: -9.8 per cent in China, -5.3 per cent in France, -2.2 per cent in Germany, -2 per cent in UK and -1.3per cent in the US.

A technical recession might be inevitable, but Australia is in a relatively good position.

The banks and governments are providing good support and from an economic perspective, we should take heart in our progress so far.

The Treasurer, Josh Frydenberg said: “The fact that the Australian economy only contracted by -0.3% shows its remarkable resilience.”

RBA Governor, Philip Lowe recently stated that “it’s entirely possible that the economic downturn will not be as severe as earlier thought.”

This article originally appeared in The Real Estate Conversation (June 9, 2020)

JOHN MCGRATH
09/06/2020

Work Changes and Future Lifestyle Options

June 26, 2020June 22, 2020 by Nicola

Where we work has always driven our choices around where we live.

Our homes and workplaces are where we spend most of our time and in today’s busy world, it’s great to have them close together because the shorter the daily commute, the more time you have for yourself and your family.

Over time as Australia’s population has grown, affordability has become a challenge in the inner rings of major capitals like Sydney, Melbourne and Brisbane.

Most people these days simply don’t have the budget to live close to the city, so they go further afield and contend with a daily commute.

City planners have been grappling with this problem for years.

Our cities will not stop growing and it’s clear that long commutes can put a strain on families both emotionally and financially.

So far, we’ve adapted by establishing ‘secondary CBDs’, such as Parramatta in Sydney, as well as major business parks in suburban areas.

This has enabled some workers to live in more affordable areas while being close to the office.

It’s a good solution but building new infrastructure takes time.

I think a new solution is presenting itself, with a big positive out of Covid-19 likely to be more people being able to work from home.

We’re in the middle of what appears to be a very successful trial of working remotely en masse, with increased productivity among the surprising results.

Could this be the start of a brand new way of working? And if so, what does it mean for property?

Working from home isn’t a new idea.

Modern technology has made it possible for years, but few big firms have been willing or adaptable enough to give it a go on any significant scale…until now.

The Australian Bureau of Statistics says 46 per cent of Australian workers are working from home today.

The benefits include a reported $12.7 million saving per day on public transport and more time for home-cooked meals, with 29 per cent of those surveyed by the ABS consuming less takeaway or delivered food in May.

There’s also been great benefits for employers, with many recent media reports of reduced costs and increased productivity within many different types of companies since staff started working remotely from home.

Westpac’s Chief Information Officer, Craig Bright told the AFR that productivity increased in April and May, with many tasks that he thought required in-office collaboration successfully completed remotely.

It’s making them wonder if home-based work should be a bigger part of the mix.

They’re not alone in their thinking.

Twitter is reportedly letting employees continue to work from home permanently if they wish.

Atlassian has told its 4,500 global staff they can work from home til the end of the year.

If remote working is the next big trend, it would transform the lifestyle choices of many Australians.

Some might head to the regions where homes are much more affordable (and paid off faster with a city income).

There will be time for breakfast with the kids and a quiet lunch break during the day.

When 5.30pm rolls around, you’ll be off to the beach for a surf instead of lining up for a train or bus.

Great regional options in NSW include Newcastle, the Hunter Valley, Wollongong, Shoalhaven, Kiama, the Southern Highlands and inland areas with airports, like Orange and Port Macquarie.

In Victoria, Melburnians might consider a new lifestyle in Geelong, Bendigo, Ballarat, the Mornington Peninsula or the beautiful Dandenong Ranges.

Brisbanites might consider the Gold Coast, Sunshine Coast, Toowoomba; or Byron Bay in Northern NSW where there’s an airport.

Those who want to stay in their capital city might swap their inner-city mortgage for a bigger and less expensive home further out.

The money you need to buy an inner-city terrace in Sydney could buy a 5 bedroom family home in the Hills, with no compromising on the quality of amenities and schools.

Having such choices would be one of the few positives out of Covid-19 and go a long way to overcoming the affordability challenges that future generations of workers face in our cities.

John McGrath

25/05/2020

This article originally appeared in The Real Estate Conversation (May 25, 2020)